The Indian markets felt the slight tremors of the fall-through of the deal between Microsoft and Yahoo. On Saturday, Microsoft withdrew its $33-a-share offer for Yahoo. The Indian markets opened flat on Monday, but positive on global cues. Later, when the European markets opened and the Yahoo stock crashed in early trade, Indian investors were wary about what would happen in the US markets.
Mr Deven Choksey, managing director, K.R.Choksey, said, “Indian traders were suspicious about what could happen later when the US markets opened.
They became wary. Profit booking was the order of the day as the Sensex was quite close to 18,000 on Friday.” Analysts felt that with the uncertainty looming over the effect of Yahoo on US markets, there was no point in taking undue risks.
“Besides the markets had a good run up from the 16,000 level to 17,500,” said one analyst adding that if the Sensex settles at 17,293 then it can hit 18,300 and from then on there can be a correction.
The investors and analysts were not too far off the mark. When the US markets opened later in the day Yahoo shares were down 20 per cent in early trade at $23 from the close of $28.67 on Friday when the talks were not going too well. Wall Street pulled back as investors digested Microsoft’s decision to withdraw its bid for Yahoo Inc. and oil prices rose to a new record over $120 a barrel. The failed deal came as a disappointment to Wall Street, as merger-andacquisition activity tends to boost shareholder value and signals to the broader market that corporate America is optimistic about the future.
The Sensex saw a choppy trading session on Monday swinging between 100 points up and down. It finally closed 109 points down at 17,491, and the Nifty closed 36 points down at 5192.
Mr Bavesh Shah, vicepresident, research, Asit C Mehta said that markets saw pure profit booking on Monday. Most of the quarter four results have been announced and there is no positive or negative trigger on the horizon. Sensex companies that declared their results saw revenues grow by 19-20 per cent from the earlier 35 per cent.
So investors will wait for more positive triggers and book profits at every rise.
Foreign analysts feel that the future rise or fall in the Yahoo stock would depend largely on what move Yahoo makes and whether its flirtation with Google will lead to any advantage to its shareholders.
While the Yahoo board supported the management’s decision to reject Microsoft’s offer as it was not willing to come up to its demand for $37 per share, investors felt that the Yahoo CEO Jerry Yang was concerned with his own interest that of his shareholders. Whichever way the Yahoo saga goes, the Indian markets will be watching with interest because it could have repercussions on the sentiment in the US markets.